“One of them is lying.” This was a Brazilian banker’s summary of the discrepancy between the Brazil’s stock market and its currency. “The question is, which is it?”
Is the Bovespa – trading at record highs – an accurate picture of the country’s financial health? Or is it the currency that is the real indicator – languishing as it is north of $5.50 – a warning that the share prices have dislocated from their economic fundamentals?
Perhaps the country’s deeply real negative interest rates – inflation is over 5% and the Selic is just 2.75%
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